Investment Overview Masthead

Investment Overview

Solar As An Investment

1. How can a photovoltaic solar electric system be considered an investment?

Installing a solar system is a capital improvement to your home (and is therefore exempt from sales tax). But unlike most real property improvements, it generates electricity and thus an ongoing cash flow, by directly reducing your electricity bills for the next 25 or more years. The initial capital investments and subsequent cash flow benefits make a solar electric system comparable to other long term, purely financial investments.

2. Why should we consider putting some of our savings into a solar electric system?

Besides the obvious environment benefits, investing in a solar electric system provides a unique opportunity to diversify away from financial markets and their volatility. The rate of return from a solar system is independent of interest rate fluctuations, accounting scandals, recessions and international crises. In this way, it can provide a new method to 
allocate investment assets and improve diversification.

3. What returns can be expected from a solar electric system?

The initial pretax return for a medium-sized system on a good site is 8%-12% annually. That compares favorably to money market accounts, CD’s, stocks and even long term treasuries. Initial returns can range from 6%-12% depending on system size, site specifics and an investor’s tax bracket. The initial rate of return can be calculated by doing a solar site survey and system design before making a decision to purchase a system.

4. How variable are the future annual returns from a solar electric system?

Future annual returns depend on solar electric system output and future electricity prices. System performance is protected by a full 5-year system warranty and a 25-year manufacturer’s warranty on the solar panels which are the major components. Electricity prices have gone up 3% annually for the last 30 years. The annual returns from a solar electric system will actually increase if this continues. Continued 3% inflation would increase an initial 6% annual return to a 10% average over 25 years.

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